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Insurance companies not covering storage of Iranian oil, says Indian Oil official

18 October, 2018, 06:34 | Author: Kristi Dunn
  • Saudi Energy Minister Khalid Al Falih addresses the gathering during India Energy Forum in New Delhi on Monday. — Reuters

While most oil analysts have attributed the sharp rise of premium crude prices since April to over $80 a barrel at least in part to the loss of Iranian exports, the USA special envoy for Iran, Brian Hook, told reporters in Paris on October 15 that the market is doing fine with less Iranian oil.

US West Texas Intermediate (WTI) crude was up 15c, or 0.2%, at $72.07 a barrel by 2.55am GMT on Wednesday, having settled up 14c.

The curbs on Iran are having an effect on oil prices, with global benchmark Brent trading now trading near its highest level in four years.

US light crude oil CLc1 was up 10 cents at $72.02.

US crude inventories fell by 2.1 million barrels last week, compared with analyst expectations for a build of 2.2 million barrels, American Petroleum Institute data showed after Tuesday's settlement.

Iranian Oil Minister Bijan Namdar Zanganeh said that the market is facing reduction in supply and no producer is able to make up for the loss.

Weak U.S. gasoline margins RBc1-CLc1 and growing U.S. shale output could also cap gains in crude prices, market participants said.

The disappearance, and presumed murder, of Saudi Arabian journalist Jamal Khashoggi at the Kingdom's consulate in Istanbul and the ongoing fallout from the incident has raised fears of Riyadh using crude oil exports as some sort of weapon. "Saudi Arabia's threat to weaponize oil and use its leverage to bully the USA and destabilize the global economy demonstrates the Faustian bargain we have all been living with for 45 years by being dependent on oil for transportation in a global, mobile economy with little alternative fuel choices", Diamond said.

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US lawmakers pointed the finger at the Saudi leadership, suggesting sanctions could be possible.

The concern is that Saudi Arabia, which has so far denied having anything to do with the disappearance of Khashoggi, will restrict its oil exports if other nations take action against the kingdom in punishment for what is now widely viewed as a likely state-sanctioned killing.

Falih also said Saudi Arabia wants to invest in Indian downstream projects and strategic oil storage.

India imported 5.67 MT oil from Iran during the quarter.

"There's been a recent correlation between stocks and oil because the sentiment hitting equities markets has been reflecting concerns over the outlook for global growth", said Ole Hansen, head of commodity strategy at Saxo Bank.

Ahead of the U.S. sanctions against Iran, India Tuesday said availability of crude oil to replace lost volumes is not an issue but the "sentiment" around losing a big oil supplier is driving prices higher.

IHS Markit vice chairman Daniel Yergin, who was present along with Pradhan while addressing reporters, said oil markets have a sentiment problem and not a supply issue.

The EIA report on Wednesday showed that crude stockpiles rose 6.49 MMbl last week, while inventories at the Cushing, Okla., complex climbed by 1.78 MMbl.

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